Download the role of business in poverty reduction

UNRISD
UNITED NATIONS RESEARCH INSTITUTE FOR SOCIAL DEVELOPMENT
The Role of Business in Poverty Reduction
towards a Sustainable Corporate Story?
Rob van Tulder
Professor, International Business-Society Management
RSM Erasmus University 1
prepared for the UNRISD project on
UNRISD Flagship Report:
Combating Poverty and Inequality
November 2008 ▪ Geneva
1
Burgemeestser Oudlaan 50, 3062 PA Rotterdam, The Netherlands www.ib-sm.org. Thanks to
Esther Kostwinder, Andrea da Rosa and Ecaterina Demcencov for extensive, resourceful and
timely research assistance.
UNRISD was established in 1963 as an autonomous space within the UN system for the
conduct of policy-relevant, cutting-edge research on social development that is pertinent to the
work of the United Nations Secretariat; regional commissions and specialized agencies; and
national institutions.
Our mission is to generate knowledge and articulate policy alternatives on contemporary
development issues, thereby contributing to the broader goals of the UN system of reducing
poverty and inequality, advancing well-being and rights, and creating more democratic and just
societies.
UNRISD, Palais des Nations
1211 Geneva 10, Switzerland
Tel: +41 (0)22 9173020
Fax: +41 (0)22 9170650
[email protected]
www.unrisd.org
Copyright © United Nations Research Institute for Social Development
This is not a formal UNRISD publication. The responsibility for opinions expressed in signed studies
rests solely with their author(s), and availability on the UNRISD Web site (www.unrisd.org) does not
constitute an endorsement by UNRISD of the opinions expressed in them. No publication or distribution
of these papers is permitted without the prior authorization of the author(s), except for personal use.
1. Introduction: the need for a descriptive approach
The corporate interest for poverty has been as old as the industrial revolution. In
the 19th century, the founders of major corporations not only invested in the set-up of
their factories, but also created ‘company villages’ and ‘social programs’ with a view to
the social well-being of their workers. Most strategies represented a combination of
enlightened self-interest, efforts to keep the (upcoming) trade-unions at bay and either
prevent governments from regulation or filling the gaps left by laissez-faire governments.
In the post-war period the poverty issue became the prime responsibility of governments
(welfare states) and civil society (development aid and local charity). If any, corporations
had only indirect responsibility for poverty. Gradually, since the midst of the 1990s and
with increasing pace since the beginning of the 21st century the (potential) contribution
and direct responsibility of corporations to alleviating global poverty – as opposed to
local poverty - has received increasing attention again (Cf. Kolk et al., 2006; Wilson and
Wilson, 2006; Prahalad, 2005). Attention is also accompanied by major controversy: in
particular the role of Multinational Enterprises investing in developing countries has by
some been heralded as a positive force to alleviate poverty, while others have been
stressing the job-displacing and income inequalities precipitating effects of the same
investments.
This paper addresses the way in which the largest firms in the world are coping
with their involvement in the issue of poverty at home and abroad. It will be analysed in
particular whether different ‘varieties of capitalism’ (VOC) or ‘business systems’ (Cf.
e.g. Whitley, 1999; Jackson and Deeg, 2008) and different industries lead to different
approaches towards poverty. The paper focuses on the one hundred largest firms in the
world – as measured by 2006 turnover (see Annex). The sample contains sufficient
representative firms from five industries and three different varieties of capitalism, to
facilitate international comparison: (1) Anglo-Saxon (containing in particular US firms),
(2) Continental European (in particular French and German firms) and (3) East Asian (in
particular Chinese and Japanese firms).
This paper is largely descriptive. It aims at identifying and documenting various
strategies that can be and are employed by corporations to reduce poverty, it tries to come
to a first assessment on the profoundness of these strategies, while also considering which
variety of capitalism (and business leadership) seems to develop the most pro-active
strategies towards poverty reduction. The prescriptive part of the paper deals with the
question whether an active or pro-active strategy towards poverty can be considered to
represent a ‘sustainable corporate story’ and whether at the moment examples or
components of such a story already exist. A sustainable corporate story requires firms to
come up with a convincing analysis of the issue at hand, in which primary responsibilities
are sufficiently specified and the approach chosen is credibly elaborated both at the
strategic and operational level. The partnership of logistics firm TNT with the UN World
Food Programme, presents an interesting example. Since food is in ample supply around
the world, hunger can be considered primarily a problem of unequal distribution. So TNT
explains its involvement in the World Food Programme as a corporate solution to a
3
global problem. This can be considered a relatively sophisticated ‘story’ at the strategic
level. At the more operational level, TNTs approach has been criticised because the
company at the same time bargains sharply with its employees (post deliverers) to
suppress wages. At the operational level, thus, the story is considered less sophisticated
than at the strategic level.
The more sophisticated the ‘story’ of a corporation is, the more it receives a
‘moral authority’ in a particular issue, which as a consequence increases its ‘license to
operate’ and its overall legitimacy (Cf. Schultz et al. 2000; Van Riel et al., 2000;
Kraemer, 2007). Stories or ‘narratives’ not only set the agenda from the perspective of
firms, but – when contained in public statements like corporate responsibility reports
and/or codes of conduct - often also represent their strategic reality (Cf. Kolk and
Fortanier, 2007).
Consider for instance the following statements/stories that have been made by
some of the one hundred largest firms in the world on the issue of poverty:
•
•
•
Oil company British Petroleum: “Our primary means of making a positive impact on poverty is
through aligning our own operations with local people’s needs. (…) We can sell affordable
products that enable people to improve their standard of living, including motor and heating
fuels. (….) Energy is a major factor in lifting people out of poverty. (…)”
Bank HSBC: ‘Supporting microfinance is one of the ways in which financial institutions can
support the UN Millennium Development Goal of eradicating extreme poverty.”
Consumer electronics firm Matsushita: “At present, the world has a large number of people
living in poverty and needs a level of economic growth sufficient to raise their standard of
living. At the same time we must not be allowed to damage the environment (…). We are thus
faced with the problem of combining economic growth and environmental conservation. (…)
Enterprises around the world are now under pressure to put in place sustainable business
models that will allow the two to be combined.”
What do these exemplary statements represent? Integrated strategies or incidental cases?
Window-dressing and a reaction to critical stakeholders or authentic efforts to deal with
the issue? A first step towards a sophisticated approach on poverty? A go-it-alone
strategy or an invitation to work together on solving the issue? In Annex A, a more
complete selection of statements by Fortune 100 firms is provided. The long list of these
quotes illustrates the diversity and richness of poverty approaches adopted by major
corporations. At the same time, it also illustrates the difficulty of analysing these
corporate approaches on a comparative basis. The lack of sophisticated descriptive
business models – that include corporate responsibility as an integral part of strategy- is
probably also the main reason why so many of the existing studies on corporate
approaches towards poverty have been on the basis of a few case studies or prescriptive
reasoning in which the moral obligation of firms is explained and/or the opportunities of
the issue for firms in general are highlighted (see Prahalad, 2005; Wilson and Wilson,
2006; Lodge and Wilson, 2006; Hart and Sharma, 2004). Prescriptive approaches suffer
from ‘case-study bias’ or the ‘advisory disease’ which implies that analysts have a
solution before diagnosing the real issue at hand(cf. Van Tulder, 2007), which also makes
them sometimes even ideological and particularly difficult to use for more general
purposes in which the complexities of the poverty issue are fully addressed. The prime
4
aim of this paper, therefore, is descriptive and aims at reaching a more thorough
understanding of the question where corporations around the world are in their approach
towards poverty and whether this can be considered sufficient en credible (‘sustainable’)
as a poverty approach.
To tackle this analytical challenge, this paper, first, discusses how the ‘issue’ of
poverty alleviation by corporations has developed over time (section 2). This discussion
is used to identify major dimensions as well as their level of maturity in the public
debate. The paper discusses propositions made since the early 21st century to increase the
involvement of business in poverty reduction and/or sketch an ‘entrepreneurial way’ out
of the poverty trap, such as public-private partnerships, the ‘bottom-of-the pyramid’,
micro credits, supply chain management, issue management and the search for new
generic business models.
Secondly, this overview of most important dimensions/categories facilitates a
typology of possible international business strategies towards poverty (section 3). This
typology elaborates on the well-known – but poorly understood - CSR acronym: (1) inactive (Corporate Self Responsibility), (2) re-active (Corporate Social Responsiveness),
(3) active (Corporate Social Responsibility), (4) pro-active (Corporate Societal
Responsibility) (See Van Tulder with Van der Zwart, 2006). What constitutes a
‘sustainable corporate story’?
Thirdly, this strategic categorization is empirically applied to the sample of the
word’s one hundred largest firms (section 4). The measures taken by these firms and the
initiatives supported by their CEOs will be inventoried and classified. The result provides
an overview of the ‘breadth’ and ‘depth’ of the approaches towards poverty reduction of
these corporations and their corporate leaders. The paper will consider whether corporate
poverty strategies depend on the industry or on the variety of capitalism from which the
firm originates. In a concluding section (section 5), it will be considered to what extent
the present state-of-affairs on the involvement of (big) business in poverty reduction is
ground for optimism or pessimism.
5
2. The genealogy of ‘poverty’ as a business issue
Since the beginning of the 21st century, the potential contribution of corporations
to a large number of societal issues has received increasing attention and controversy.
This also applies to arguably the biggest global challenge of the moment: alleviating
poverty. Until recently, the issue of poverty was largely ignored in management theory
and practice (Jain, Vachani, 2006). There are at least three reasons for this. Firstly,
because poor people operate in the informal economy and have limited buying power.
Secondly, the definition of poverty itself is complex. Do we consider absolute or relative
poverty for instance? What about ‘working poor’? Thirdly, the issue of poverty has many
‘issue owners’ and it is extremely hard to identify primary responsibilities. Poverty for
some is a macro-economic issue that is related to the growth of economies in general, to
others poverty can be directly associated with the alleged unemployment effects of
relocation strategies of Multinational Enterprises (MNEs), whilst again others consider
poverty primarily a mental state that can largely be attributed to personal traits and
abilities.
Studies that tried to establish a link between poverty and MNE strategy have
focused on the relationship between Foreign Direct Investment, employment and income
inequality (Cf. Fortanier, 2007). It was found for instance that MNE affiliates pay on
average higher wages than local firms and are more capital intensive. What this does to
poverty alleviation, however, is difficult to establish. Direct MNE employment creation
can be considered more beneficial to skilled than for unskilled workers. The quality of
the employment provided by MNEs, thereby, is more often questioned. It has also been
suggested that the policy competition between governments to attract FDI, can sustain
less stringent safety and health regulation, as well as lower wages – sometimes below
subsistence level – thus creating a subclass of so called ‘working poor’. Management
studies at the moment lack the firm specific strategic frameworks, the conceptual tools as
well as the firm specific data to address the poverty issue in all its dimensions.
This rather ambiguous state of affairs, however, has not prevented the issue from
appearing prominently on the agenda of corporate decision makers. Neither did it prevent
business gurus from devising formulas in which poverty is considered an opportunity
rather than a threat. Consequently, the mood towards the involvement of firms in general
and MNEs in specific in poverty alleviation is changing. Will this mood-change prove
sustainable or is it merely a new management gimmick? What is the influence of other
issues like global warming? The answer to these questions largely depends on a proper
assessment of the way poverty as a challenge has become an ‘issue’ for corporations.
Issues generally follow a life-cycle: from birth and growth, towards development,
maturity and settlement. What occasions have developed as regards the issue of povertyas-business-challenge/responsibility?
2.1 Birth and growth: triggering incidents and growing societal discontent
The growth of an issue occurs specifically when those first in command fail to address an
issue adequately. The discontent grows even further when the issue can be clearly
6
defined, is given a popular name and the media latches onto unsuspecting protagonists.
Examples include: ‘Frankenstein Food’ (introduced by Prince Charles), or ‘Global
warming’ (supported by Nobel Prize Laureates or former vice president Gore). The
transition to this phase is often initiated by a triggering event, usually organized by a
visible and legitimate stakeholder. For the poverty-as-business-challenge issue, important
triggering events became meetings of international organizations like the World Trade
Organisation, the World Bank and the G8 Summits. Triggering concepts became: ‘The
Millennium Development Goals’, ‘Decent work’, ‘outsourcing’, the ‘Wal-Mart effect’,
and the ‘race to the bottom’.
2.1.1 Absolute poverty
The issue of absolute poverty has been on the agenda of governments for most of the
post-war period. But renewed attention was triggered in the year 2000, when 189
countries formulated eight Millennium Development Goals (MDGs) and specified
halving poverty – defined as those people living on less than a dollar a day - by the year
2015 as their prime goal (MDG1). Perhaps more importantly, an instrumental goal
(MDG8) was formulated, in which partnerships with private corporations and a good
business climate were considered vital to achieve sustainable development. The growing
attention for the involvement of the business sector in the eradication of poverty was also
picked up by multilateral organizations such as the World Bank and the IMF. They
started to stress the importance of a favourable climate for ‘doing business’ and the
related importance of ‘good governance’ for development. The intellectual foundation for
this strategy was based on the research of Hernando de Soto (2000) who argued that one
of the most important causes of poverty has been bureaucratic barriers and the lack of
property rights – linked to lacking access to credit - that prevented poor people from
setting up an own business.
The issue of quickly achieving (some) poverty reduction has since been kept on
the agenda due to a variety of NGO campaigns targeting international government
meetings. A good example of the way in which this mechanism works, is provided by the
G8 Summit in July 2005 in Gleneagles (Scotland). This occasion triggered the ‘make
poverty history’ campaign. The supporting book ‘The end of Poverty” by MDG architect
Jeffrey Sachs (2005) – with a foreword by singer and entrepreneurial activist Bono –
highlights the alliance of scholars and activist to keep the issue on the top of the agenda.
2.1.2 Relative poverty and working poor
The issue of working poor and relative poverty has been set on the agenda by trade
unions since the beginning of the industrial revolution. In many countries this issue
became regulated through the institution of ‘minimum wages’ - in particular in Europe
where trade unions have been better organized and institutionalized. In Anglo-Saxon
countries, a (decent) minimum wage has been much less obvious, for fear of disturbing
the smooth functioning of labour markets. In most developing countries the issue is still
in its infancy. With the increasing integration of developing countries into the value
chains of western companies since the fall of the Berlin Wall in 1989 and the start of the
era of ‘globalization’ (two clear triggering events), the issue received renewed attention
in particular by western trade unions. The most important allegation has been that a ‘race
7
to the bottom’ would materialize in which developing countries – but even developed
countries – would start to relax labour regulation, and lower wages and taxes to attract
Multinational Enterprises. The flip side of this statement has been that MNEs were
accused of actively stimulating such a race by playing off governments against one
another in a search for the weakest possible regulation. The jury is still out whether this
phenomenon is actually happening. The concept of a ‘race to the bottom’ triggered
greater attention for the issue of working poor (as well as for poor labour conditions).
As a consequence, the International Labour Office intensified its campaign for
‘decent wages’. The question of decent wage levels and fair labour remuneration
practices had always been at the centre of the ILO's actions. Already its original
Constitution (1919) referred to the "provision of an adequate living wage" as one of the
most urgently required reforms. However, the ILO conventions are notorious for their
lack of ratification by member states. The concept of ‘decent work’ or ‘living wage’
triggered in particular attention at the moment that western firms announced to relocate,
to outsource or to offshore facilities to ‘low wage’ developing countries. Since the end of
the 1990s, many elections in developed countries have had the outsourcing/off-shoring
issue as a core point of dispute.
“Fair Labor” and “Fair Trade” movements targeted in particular the issue of working
poor as a result of the unfair operation of the international trading system and the
(perceived) negative consequences of the inclusion of workers in the international supply
chains of multinationals. The anti-Nike campaign in the 1990s on the use of child labour
was followed by the ‘clean clothes’ campaign’ and a large variety of ‘stop child labour’
campaigns.
Finally, the struggle for decent wages and the problems associated with ‘working
poor’ received a new corporate icon by the actions against Wal-Mart, the world’s biggest
retailer and private employer. It was claimed for instance that Wal-Mart sales clerks are
paid below the federal poverty lines. The anti Wal-Mart campaign “The high cost of low
price” suggested that Wal-Mart employees are also making intensive use of social
security. Consequently, the issue of working poor received a name: the ‘Wal-Mart effect’
(see for instance Business Week, February 6, 2005). Discussing the challenges of the
Wal-Mart effect has become part of a scientific debate that build partly on the ideas of the
sociologist Ritzer in the early 1990s who talked about the “McDonaldisation of society”
(Ritzer, 1993). In both cases a corporate icon triggers an issue. The Wal-Mart effect adds
to this sociological perspective the economic danger of deflation in which lower wages
and associated poverty lead to insufficient purchasing power and ultimately a negative
growth spiral for the whole economy.
2.2 Development and maturity: measurement and implementation
An issue enters the development phase when important stakeholders, individually or
collectively, demand concrete changes to corporate policies and scholars develop models,
approaches and strategies that can solve the issue. In the mature or settlement phase, the
issue is addressed by concrete strategies, new legislation and the like, which implies that
the expectational gap gets bridged. If corporations do not develop credible strategies in
8
this phase the issue remains controversial – depending on the relative strength of the
stakeholders and on the extent to which ‘issue fatigue’ can also appear. The above
triggering events precipitated a large number of initiatives, some of which already existed
long before the actual events appeared.
2.2.1 Measuring the MDGs
The concrete aims of the Millennium Development Goals stimulated a number of
organizations to try to measure the concrete contributions of corporations to achieving
these goals. The contribution of the private sector to MDG1 was first identified by the
UN Millennium Project (2005) itself as (1) increasing productivity, (2) creating jobs, (3)
paying taxes and (4) the supply of necessary goods for reasonable prices. The Global
Reporting Initiative (GRI, 2004) additionally tried to link the core activities of businesses
to the MDGs in the form of concrete reporting guidelines. GRI considered (1) affordable
products, (2) building local linkages and (3) creating employment opportunities as key
indicators of MDG1. In particular measuring the creation of jobs in the formal sector is
considered critical in escaping the poverty trap. It was also proposed – but not
implemented - to look at employment and job creation in distressed or disadvantaged
regions, to make this indicator more specifically useful for MDG1. Measuring the direct
contribution to poverty alleviation itself, however, proved too difficult and too politically
sensitive. The concept of poverty was deemed too multi facetted and too complex. GRI
also wanted to avoid the introduction of a misleading measure like the one-dollar-a-day
measure of poverty. Instead, the 2006 update of the GRI guidelines (G3) chose for a set
of more general social and economic indicators on working conditions. Another
measurement project was pioneered by the Dutch Sustainability Research organization
(DSR, 2007). First applied to the ABN AMRO bank and later also to Philips, Akzo
Nobel, BHP Billiton and TNT, the project identified two indicators particularly relevant
for MDG1: (1) community development (local entrepreneurship, the provision of
essential products and services), and (2) the provision of employment and living wages
(through local recruitment, living wages, the right to organize and the attention to
vulnerable groups). The exercise primarily measures intentions rather than performance.
It is planned to make this MDG Scan available on internet.
2.2.2 Labelling
Labelling or trade-marks enables a company or a group of companies to communicate its
commitment to society and provide consumers with information on the quality and
contents of products. Especially fair trade labels aim at communicating the corporate
approach to poverty alleviation. The first “Fair Trade” Label was introduced in the late
1980s in the Netherlands. The issue of labelling as a way to deal with poverty picked up
steam since 2002 when Tesco, the UK’s largest retailer started selling Fair Trade
bananas. The label serves as an “independent guarantee that disadvantaged producers in
the developing world are getting a better deal” (i.e. a fair price). The fair trade movement
thus aims at poverty alleviation through the fairer operation of international markets. But
it remains exceptionally difficult to address a complicated CSR problem by means of a
label. Consumers do not always convey the message correctly and there is hardly any
internationally coordinated accreditation of labels. The market penetration of fair trade
labels is therefore still below 5% in most product markets. A vital problem with
9
increasing the effectiveness of labels is how to coordinate and monitor labels. Active
firms are inclined to adopt an own label as a unique selling point towards customers, but
coordination and standardisation (for instance through the Fair Trade foundation) is often
required to make the label into an actually effective poverty alleviation strategy.
2.2.3 Codes of conduct
Codes of conduct can help corporations to level the playing field and promote standards
that can overcome the ‘regulatory gap’. A cascade of codes has developed, some of
which refer to the issue of relative poverty and working poor, through provision on
labour conditions. But not many dealt directly with poverty alleviation (Kolk et al, 2006).
Industry codes that focused on labour conditions were introduced, for instance in Toys
(1995), Apparel (1997), Sporting Goods (1997), Fertilizers (1990, 2002), Iron and Steel
(1992, 2002), Cyanide (2000), Mining and Metals (2000), Coffee (2004). Also coalitions
(or networks) consisting of corporations, governments and NGOs started to formulated
standards, declarations or guidelines. Particularly relevant for poverty alleviation have
been the Ethical Trading Initiative (ETI, 1998) and the Fair Labour Association (1998).
In particular the ETI Base Code tried to apply a multi-dimensional definition of wellbeing and poverty for instance by referring to a ‘living wage’ and ‘no excessive working
hours’ (IDS, 2006).
2.2.4 Bottom Of the Pyramid (BOP)
Since 2002, a number of business scholars started to stress the opportunities in doing
business with the poor. In particular the ‘bottom of the pyramid’ approach (Prahalad and
Hart, 2002) has become popular. In the words of C.K. Prahalad (2005) it should be
possible to ‘eradicate poverty through profits’. The “fortune” to be gained at the Bottom
of the Pyramid (Prahalad and Hart, 2002; Prahalad, 2004), referred to the four billion
people that live on a per capita income below U$ 1,500 (PPP). Combined, these people
represent a ‘multi-trillion dollar market’ that outsizes industrialised countries – certainly
for basic commodities such as food and clothing.
The Bottom of the Pyramid thesis presents a compelling business case for poverty
oriented strategies, but not many contributions have yet examined specific strategies for
actually reaching that bottom. Since its inception, the number of critics has also mounted.
In case multinational enterprise provide complementary job opportunities and create new
markets for cheap products that did not exist (such as mobile phones for instance), the
BOP strategy works in alleviating poverty. But part of the ‘market’ at the bottom of the
pyramid is in practice already served by local firms and the informal economy.
Multinationals can ‘crowd-out’ more local firms and local employment than they create.
Finally, at the real ‘bottom’ of the pyramid, the purchasing power of the population is
much less attractive (and the transaction cost to reach considerably higher); so in practice
the BOP strategy has already been redrafted into a “Base of the Pyramid” strategy – a far
more modest approach than the original claim. There are therefore basically two types of
BOP strategies: a ‘narrow BOP’ strategy that only focuses on the market opportunities
and a ‘broad BOP’ strategy that takes the wider repercussions and the net effects of the
strategy into consideration. The latter also requires that critical NGOs are involved in
evaluations of the strategy. A good example of the latter is provided by the ‘learning
10
partnership’ of Oxfam/Novib and Unilever. In a case study of Unilever Indonesia,
Oxfam/Novib explored the link between international business and poverty reduction
(Clay, 2005) and focussed in particular also on the indirect consequences of Unilever’s
involvement in Indonesia. .
2.2.5 Micro-credits
Micro-credits provide an entrepreneurial way out of poverty. The micro-credit movement
started in Bangladesh and India in the 1980s and received global recognition in the 21st
century – with the UN declaring 2005 ‘Microcredit year’ and the 2006 Nobel Peace Prize
awarded to Mohammed Yunus, founder of the Grameen Bank. Micro-credits not only
provide cheap capital to poor people, but give high yields for the banks involved. In 2006
around 125 million people were involved in micro-credit schemes. But the micro-credit
movement developed largely outside of the mainstream (multinational) banking system
and was part of local (small) private sector development initiatives. In case big western
firms take up the provision of micro-credits, two strategies can be distinguished: microcredits as a relatively marginal activity (managed for instance by the corporate
philanthropy department) and micro-credits as a core business activity (with substantial
volumes). The latter has not really materialised so far.
2.2.6 Novel business models
G. Wilson and P. Wilson (2006) constructed a ‘rigorous profit-making argument for
MNEs to do more business with the poor”. It is aimed at international managers seeking
for new profit opportunities and decreasing risk in developing countries
(www.makepovertybusiness.com). Poor can be considered a threat – to reputation and
security – if the intensified relationships with developing countries are badly managed.
Expand the argument beyond the bottom of the pyramid, where poor are primarily seen
as consumers; expansion of ‘country risk’ argument from International Business theory,
prescribing a more (pro)active stance in which economic development is served and new
‘innovative’ products and services are explored. The authors identify areas in which
‘innovation for poverty reduction’ can be applied, which can create novel – often
relatively simple - products first in developing markets (facing specific challenges only
relevant for emerging markets) that later can even be fed back into developed markets.
An example is CEMEX, the Mexican cement company that designed novel ways
of community-based dynamics to diffuse its cement products. The lesson was that ‘much
of the useful innovation in poverty reduction revolves around identifying what elements
are ‘missing’ from the physical, economic and legal infrastructure of a developing
economy and then finding alternatives’ (Wilson and Wilson, 2006: 128). The claim is
that there is a true new business model developing in some developing countries.
Interestingly, Prahalad (with Krishan, 2008) later on build upon these same ideas to
produce an even more generic model of innovation in which producers and communities
(of users, suppliers and the like) ‘co-create’ systems that are claimed not only to be
economically feasible, but also socially desirable.
2.2.7 Partnerships
Austin (2000: 44) labelled partnerships between public and private parties as the
11
“collaboration paradigm of the 21st century” needed to solve “increasingly complex
challenges” that “exceed the capabilities of any single sector” (cf. Selsky and Parker,
2005). Since the 2002 World Summit on Sustainable Development (WSSD) in
Johannesburg, these so called ‘cross-sector’ partnerships have become important
instruments for addressing problems of global development and reaching the Millennium
Development Goals (MDGs), in which the contribution of companies is seen as crucial.
Additionally, there has also been increasing interest in public-private partnerships, in
which companies cooperate with governments or international organisations (Chataway
and Smith, 2006; Samii et al., 2002). Following the WSSD in Johannesburg, more than
300 partnerships had been registered by the UN secretariat by the end of 2006.
2.2.8 Poverty as issue and stakeholder management
Strategic management of firms is increasingly aimed at ‘issues’ and – related reputation
management and corporate branding (Cf. Van Tulder with Van der Zwart, 2006;
Fombrun and Van Riel, 2004). Issues management – and the related Public Affairs
function – can be elaborated in a more or less active manner. More and more firms are
also using ‘issue advertisement’ campaigns to engage stakeholders in their critical
decision making processes. What makes an issue strategy the most pro-active is in case
secondary (single issue) stakeholders such as environmental or human rights NGOs, or
even so-called ‘fringe stakeholders’ such as ‘the poor’, ‘the weak’, or the ‘illiterate’ (Hart
and Sharma, 2004) get involved. Hart and Sharma (ibid) refer to this process as the move
from simple ‘transparency’ to ‘radical transactiveness’. The technique that proofs
particularly appropriate for getting relatively loose groups of stakeholders with divergent
interest around the table in a productive manner is the so-called strategic stakeholder
dialogue (Van Tulder et al. 2004; Van Tulder with Van der Zwart, 2006: chapter 20).
Increasingly issue and stakeholder management gets linked to areas of ‘leadership’ and
the request from society towards business to develop new forms of leadership. Where
‘managers’ help to walk the road more efficiently, ‘leaders’ help defining that road and
stimulate their workers to want to walk it. This applies in particular to so called
‘transformational leadership’ (ibid) or ‘Public Integrative Leadership’ that has a
particular bearing on global societal issues such as poverty.
So what are critical societal issues according to business leaders? In the
introduction of this paper we noted already a number of statements that make clear that
business leaders have discovered ‘poverty’ as an issue, but there are other issues as well.
What is the relative ranking given to various issues? Research of RSM Erasmus
University (Kaptein et al., 2007) under a representative sample of the CEOs of the 200
largest firms in Europe, shows that these firms over the 1990s and early 21st century have
started to integrate CSR strategies into their mainstream or ‘core’ strategies. This implied
that the CSR staff increased, that the CEO (33%) or another board member (34%) has
become responsible within the company, with a growing number of measures taken to
operationalise this strategy (reports, whistleblowing procedures, standardization, codes,
CSR issues in marketing campaigns). The attention for a large number of issues –
including poverty – increased substantially. Figure 1 shows the increasing attention for a
sample of ten issues. In 2007 CEOs indicated that they perceived the impact of the
following issues as highest: corruption (4.6 on a scale of 5), transparency, health and
12
safety (4.5), labour rights, climate change (4.3). Somewhat less score income equality,
fair wages, fair trade and procurement (3.9), ecological diversity (3.7), education (3.5)
and poverty (3.0). Even the general issue of poverty scores above the mean. European
firms are leading in this respect (Van Tulder with van der Zwart, 2006) with an
increasing number of firms setting quantitative targets for a large number of issues (34%
of the companies for instance set quantitative targets for at least five CSR issues).
Figure 1 Issue Relevance: 1980s – 2007
Source: Kaptein et al., 2007
13
3. Business strategies towards poverty reduction
As the issue ranking of European CEOs (figure 1) illustrates, poverty eradication as a
business challenge is still in the approximate development phase of its life-cycle. The
issue is far from being mature, let alone resolved. Triggering events have resulted in
relatively concrete aims and goals; new concepts have been developed that structure the
debate; but the issues are not yet resolved, let alone clearly addressed. New concepts are
not undisputed, the operationalisations are not always clear and are not well coordinated,
whilst the relationship between business strategies and the resolution of the issue at hand
are not yet clear. . There is abundant room for ‘PR’ activities of firms in which a concept
(like micro-credits or the BOP) can be embraced only to ward off critical stakeholders.
As regards the introductory statements in Box 1 on poverty: what makes these into core
firm strategies and beliefs, rather than marginal public relation statements?
The assessment of corporate strategies on societal themes represents the area of
corporate responsibility, often abbreviated as ‘CSR’. But the catch-all category of ‘CSR’
in fact obscures important strategic variability and contextualisation. The contribution of
CSR strategies to align the interests of the poor depends on the circumstances and the
concrete elaborations of business strategies in developing countries (Blowfield, 2005). In
that context four CSR approaches with different procedural attributes can be proposed in
which the very CSR abbreviation also has four different meanings: in-active, re-active,
active and pro-active (Cf. Preston and Post, 1975; Van Tulder with van der Zwart, 2006).
The continuum of CSR business strategies is conceptually related to the basic distinction
in conventional moral theory between what is required and what is desired, or between
the ‘morality of duty’ and the ‘morality of aspiration’ (Michaelson, 2006). Table 1
summarizes the most important characteristics of these four approaches to CSR and gives
some operationalisations of indicators of corporate poverty strategies.
14
IN-ACTIVE
Table 1 Four CSR approaches towards Poverty
RE-ACTIVE
ACTIVE
PRO-ACTIVE
“Corporate
Self
Responsibility”
Legal compliance and
utilitarian motives
Efficiency
Indifference
Inside-in
‘doings things right”
‘doing well’
Poverty approach:
o No explicit
statements on poverty
o We create jobs and
employment (as byproduct of profit
maximization)
o Payment of taxes
o Affordable
products
o No code of
conduct and/or low
compliance likelihood
o No support for
labels
o No separate
business model for
poor
“Corporate
Social
Responsiveness”
Moral (negative) duty
compliance
Limit Inefficiency
compliance
Outside-in
“don’t
do
things
wrong”
‘doing well and doing
good’
Poverty approach:
o Contribution to
economic growth
o Narrow BOP:
mention of market
changes in poor regions
o Creation of local
employment used
defensively
o Micro-credits as
(small) part of
philanthropy
o Transfer of
technology and
knowledge mentioned,
but not specified
o Vague code and
low specificity as
regards poverty
o Support for Global
compact and modest
support for GRI
o Dialogue vaguely
mentioned
“Corporate
Social
Responsibility
Choice for responsibility and virtue
Equity/Ethics
integrity
Inside-out
“doing the right things’
‘doing good’
Poverty approach:
o Explicit statement
on moral
unacceptability of
poverty
o Definition of
decent wage
o Broad BOP:
explicit view on how
this strategy addresses
poverty alleviation (net
effect)
o Creation of local
employment
opportunities at
suppliers
o Micro-credits as
part of business
strategy
o Transfer of
technology and
knowledge is specified
o Explicit support
for MDG1
o Wholehearted
support for GRI
o Philanthropy is
aimed at poverty in
general
o Specific code
and/or labelling on
poverty and/or fair
trade
"what is required”
Economic Responsibility
[Wealth oriented]
Narrow (internal) CSR
“Corporate
Societal
Responsibility”
Choice for inter-active
responsibility
Effectiveness
Discourse ethics
In-outside-in/out
“doing the right things
right”
‘doing well by doing
good’
Poverty approach:
o Strategic statement
on poverty
o Explicit support
for all MDGs
(including #8 on
partnerships)
o Active
partnerships with
NGOs and international
organisations on
poverty
o Very explicit code
and support of highest
possible transparency
(GRI)
o Transfer of
technology and
knowledge is specified
and discussed for its
impact on poverty
alleviation
o Codes and
labelling activities part
of a contract with third
parties (high specificity
and high compliance
likelihood)
o Dialogues as an
explicit tool to raise
strategic effectiveness
o Search for a
separate (strategic)
business model for the
poor
“what is desired”
Social Responsibility
[welfare oriented]
Broad (external) CSR
15
3.1 Inactive approaches
The inactive approach reflects the classical notion of Friedman that the only
responsibility companies (can) have is to generate profits, which in turn generates jobs
and societal wealth and can therefore be considered a form of CSR. This is a
fundamentally inward-looking (inside-in) business perspective, aimed at efficiency in the
immediate market environment. Entrepreneurs are particularly concerned with ‘doing
things right’. Good business from this perspective equals operational excellence. CSR
thus amounts to ‘Corporate Self Responsibility’. This narrow approach to CSR requires
no explicit strategy towards poverty alleviation. It aims at the prime ‘fiduciary duties’ of
managers vis-à-vis the owners of the corporation, which could imply affordable products,
the growth of the corporation, paying taxes and job/employment creation, but only as
indirect by-product of a strategy aimed at profit maximisation. When faced with the
trade-off between job creation and efficiency enhancement (or share holder value
maximisation) these firms will chose for the latter. The company is relatively indifferent
towards the issue of poverty. The corporation stresses economic growth (general
efficiency) and its general contribution to that as precondition for poverty alleviation,
without further specification of its own contribution. The company is relatively
indifferent towards including poverty related initiatives in its (core) business practices.
3.2 Reactive approaches
The re-active approach shares a focus on efficiency but with particular attention to not
making any mistakes (‘don’t do anything wrong’). This requires an outside-in orientation.
CSR translates into Corporate Social Responsiveness. Corporate philanthropy is the
modern expression of the charity principle and a practical manifestation of social
responsiveness. In this approach the motivation for CSR is primarily grounded in
‘negative duties’ where firms are compelled to conform to informal, stakeholder-defined
norms of appropriate behaviour (Maignan, Ralston, 2002). The concept of ‘conditional
morality’ in the sense that managers only ‘re-act’ when competitors do the same, is also
consistent with this approach. This type of firm deals with the issue of poverty primarily
when confronted with actions of critical stakeholders, for instance in the area of ‘working
poor’ and in an effort to limit the negative influences of firm strategies on poverty
(Singer, 2006) or restore corporate legitimacy (Lodge, Wilson, 2006). Primarily in
reaction to concrete triggering events – and often not spontaneously - these companies
legitimise their presence in developing countries or in socially deprived regions by
arguing that they potentially transfer technology, contribute to economic growth and
create local job opportunities, but without specifying it in concrete terms or taking up
direct responsibility. The company wants to reduce its vulnerability as regards the issue
of poverty. Poverty (the bottom of the pyramid) becomes in particular an opportunity
when the growth possibilities in the existing markets are declining. The bottom of the
pyramid is primarily the ‘base’ of the pyramid. Support for guidelines like the UN’s
Global Compact - that is neither specific nor requires high compliance likelihood – is the
typical approach of a re-active CSR strategy (See Kolk and Van Tulder, 2005). Company
considers philanthropy a sufficient channel through which concrete poverty issues (in
particular related to disaster relief and other ad-hoc events) can be dealt with.
16
3.3 Active approaches
An active approach to CSR is explicitly inspired by ethical values and virtues (or
‘positive duties’). Such entrepreneurs are strongly outward-oriented (inside-out) and they
adopt a ‘positive duty’ approach. They are set on doing ‘the right thing’. CSR in this
approach gets its most well-known connotation – that of Corporate Social Responsibility.
This type of firm has a moral judgement on the issue of poverty and tries to come up with
a number of activities that are strategic (core activities) and/or complementary to its own
corporate activities. Such firms for instance can define what ‘decent wages’ are and can
come up with substantial philanthropy activities towards poverty alleviation in markets
where it is not active. The re-active firm will primarily locate its philanthropy in the
vicinity of its corporate activities (thus the growing attention for so-called ‘strategic
philanthropy). The active company accepts (partially) responsibility for the issue of
poverty in particular where it is directly related to its own activities and responsibilities.
Poverty (the bottom of the pyramid) is explicitly addressed as a morally unacceptable
issue for which perhaps entrepreneurial solutions exist. The (indirect) job creating effects
of the company with its suppliers are also specified. In case this company embraces for
instance micro-credits it is not only seen as a regular market opportunity or a PR
instrument , but as a strategic means for reaching the real bottom of the pyramid for
which concrete criteria should be developed to measure its effectiveness and create
ethical legitimacy.
3.4 Pro-active approaches
A pro-active CSR approach materializes when an entrepreneur involves external
stakeholders’ right at the beginning of an issue’s life cycle. This pro-active CSR approach
is characterized by interactive business practices, where an ‘inside-out’ and an ‘outsidein’ orientation complement each other. In moral philosophy, this approach has also been
referred to as ‘discourse ethics’, where actors regularly meet in order to negotiate/talk
over a number of norms to which everyone could agree (cf Habermas 1990): ‘doing the
right things right’ (or ‘doing well by doing good’). This form of Corporate Societal
Responsibility (Andriof, McIntosh, 2001:15) shifts the issue of CSR from a largely
instrumental and managerial approach to one aimed at managing strategic networks in
which public and private parties have a role and firms actively strike partnerships with
non-governmental organisations to come up with more structural solutions to poverty.
The CEO of Unilever, Anthony Burgmans, in this context likes to elaborate CSR as
‘Corporate Sustainable Responsibility’. Firms that aim at a pro-active poverty strategy
are most open to the complex and interrelated causes on poverty and acknowledges that
poverty can only be solved through partnerships and issue ownership of all societal
stakeholders involved. This type of firms is also willing and able to see the problematic
relationship between low wages and/or low prices with low economic growth which
could hamper a more structural approach to poverty. A possible legal elaboration has
been provided by Lodge and Wilson (2006) who introduced the construct of a “World
Development Corporation” - an UN-sponsored entity owned and managed by a number
of MNEs with NGO support.
17
3.5 A sustainable corporate story?
The transition from an inactive to a more proactive approach can generally be considered
to mirror ever more sophisticated corporate stories in which firms not only go beyond
‘philanthropy’ or their general ‘fiduciary duty’, but increasingly engage in partnerships
with other stakeholders to deal with the more structural dimensions of poverty. The move
from an inactive to an active approach is part of an ‘internal alignment’ process in which
firms face the challenge of overcoming internal barriers to change. This relates to
functional areas of management, for instance in case the marketing department is not
aligned with the purchasing or the Human Resource Management department.
Companies face increase internal coordination problems and will have considerable
difficulties in developing a coherent corporate story towards their primary stakeholders:
employees, suppliers, distributors, owners/financiers and competitors. The move from a
re-active to a pro-active approach is part of an ‘external alignment’ process in which face
the challenge of overcoming external barriers to change. In this case the relationship with
secondary – often single-issue – stakeholders has to be managed in a sophisticated
manner. As regards the issue of poverty, this in particular relates to such secondary
stakeholders like human rights and fair trade organisations and/or international trade
unions that have no direct link with the company’s employees.
The more firms consider poverty alleviation strategies to part of their core
business/competencies, the more they need to develop sustainable corporate stories. A
sustainable story then becomes also part of a ‘sustainable competitive advantage’ (Cf.
Porter, 1990) and philanthropy becomes part of a strategic partnership with relevant
stakeholders and not an isolated strategy. The latter is the case when the poverty
alleviation strategy is managed by a foundation that is relatively independent of the
company, instead of part of the strategic planning of the whole company. In that case the
poverty alleviation strategy becomes part of the search for a new business model that
might contribute to a structural poverty alleviation approach.
Illustrative of stories and statements that might apply for the status of a
‘sustainable corporate story’ are the quotes listed in Annex A. The following first
observations can be made on the basis of these quotes:
[a] General emphasis. Many firms acknowledge their status as a multinational
corporation, and link this to their general interest in making ‘globalization good’:
• most companies link their statement on poverty to the process of ‘globalization’
(making ‘globalization good’ implies addressing the perceived negative
consequences of globalization);
• companies also tend to mention explicitly when they employ activities in the
‘poorest regions’ of a country (cf. Nissan, sustainability report 2006)
• many companies stress the importance of the creation of effective markets and
improve the ‘risk taking capacity of the poor’ (Aviva, CSR report 2006)
• Many companies link their CSR strategies to programmes in support of local
communities or with reference to some of the global poverty projects (such as
Global Compact or the MDGs); not often are strategies explicitly related to
national poverty programmes – probably because they tend to be too political and
18
•
•
can alter in case governments change. Exceptions to the latter rule can be found
with state-owned companies – such as Petrobras (Brazil);
Many firms stress their commitment to paying decent wages, and thus helping
poverty alleviation through their employment creation abilities;
Only a few explicitly stress the need for ‘new business models’ (such as Procter &
Gamble)
[b] Specific emphasis. Specific industries tend to address in particular those dimensions
of poverty that are directly related to their industry:
• energy and automotive companies stress the link between energy and poverty
• financial services look at the provision of microfinance and access to capital in
general; some like to show that they are leading in this area (we are at the
forefront; like Lloyds).
• Consumer product corporations (retail and food processing) as well as utility
producers stress the poverty alleviation potential of providing ‘affordable
products’; they also stress that economic growth is a necessary condition for more
structural poverty alleviation (or ‘raising standards of living’). The poor are
primarily considered a ‘market’ and developing countries thus become
‘developing markets’ (cf. P&G). Compared to other issues these firms explicitly
attach priority value to the issue of poverty (see for instance explicit statement of
EdF). A number of firms explicitly uses the phrase ‘sustainable development’, but
without exactly elaborating that term.
• Retailers (like Tesco) link the poverty issue to trade liberalisation and thus
directly to their supply chain, which is most vital to their competitive position
[C] Partnership emphasis. Many firms mention that they are partnering with NGOs or
international organisations on areas that are related to the issue of poverty: community
development, microfinance, literacy programmes and the like. The ‘Public-Private
partnerships” have already been classified as indicative for a pro-active strategy. But the
extent to which this is the case strongly depends on the nature of the partnership and the
issue involved. In case of partnerships that were (temporarily) founded for disaster relief
for instance – in the case of ecological disasters like Tsunamis, earthquakes or hurricanes
– the approach has to be qualified as ‘reactive’ at best. Table 2 shows how specific types
of partnerships in principle can be positioned in the basic scheme of CSR approaches (Cf.
also Table 1).
19
Table 2 – An application to partnership strategies
Re-active
active
Pro-active
In-active
No partnership
Disaster relief
Sponsorship
Micro-finance (narrow approach)
Education
Literacy
Health (HIV/Aids)/water provision
Community development;
Sustainable/fair
trade/labour/wages/food/taxes;
Financial sector development (broader than
micro-finance)
4. Varieties of Capitalism and poverty approaches
What patterns can actually be found in the strategies of the 100 largest Fortune Global
firms (annex 1)? This paper gives a first inventory of the poverty related strategies of
these for the years 2005/2006. It applies the framework of Tables 1 and 2 to each of these
firms. Codes of conduct, websites, and corporate sustainability reports of each of these
firms were analysed. Half of the Global Fortune 100 list of 2006 comprises European
firms, around one third is American, whereas one sixth is Asian. So we are not only
capable to distinguish between general strategies and sectors (section 4.1), but also to
consider whether each of the three major varieties of capitalism in fact represent a distinct
approach towards poverty (section 4.2).
4.1 General patterns
Around 58 of the largest 100 corporations had undertaken some initiative on the issue of
poverty. At least four firms (Citigroup, # 14 on the list, Deutsche Bank, #48, Electricité
de France, # 68, and Deutsche Post, # 75) explicitly communicated a moral statement that
poverty is unacceptable. Some corporations acknowledge the issue of poverty, but link it
primarily to economic growth – thus supporting the mainstream approach to poverty
alleviation which does not require an active corporate involvement. Matsushita Electric
(#47 on the list) for instance argues in its 2006 Global Corporate Citizenship report that
“at present, the world has a large number of people living in poverty and needs a level of
economic growth sufficient to raise their standards of living”. Other corporations express
more explicit (active) concern over issue of poverty and link it to the own corporate
responsibilities. For instance BP (#4) in its 2005 sustainability report states that its
‘primary means of making a positive impact on poverty is through aligning our own
operations with local people’s needs”. Petrobras (#86) states in its social and
environmental report of 2005 “what motivates us is the ongoing quest to improve the
20
quality of life in the communities in which we operate. Our initiatives are in areas such as
job creation, income generation, combating poverty and hunger (…)”.
One out of five corporations is searching for ‘partnerships’ with NGOs and
international organizations on the issue of poverty. One out of five corporations had also
developed poverty oriented programs in their philanthropy activities. The Shell (#3)
foundation for instance aims to support sustainable solutions to social problems arising
from the links between energy, poverty and environment with a $ 250 million
endowment. It issued a well received report ‘Enterprise solutions to Poverty’. However,
intentions and philanthropy activities do not necessarily reveal the implementation of
concrete core strategies. So we considered in more detail to what extent the 100 largest
firms in the world at the moment are making their commitment to alleviate poverty more
concrete. One out of ten firms on average – in particular American and Japanese firms –
consider the provision of ‘affordable products’ as an important contribution to poverty
alleviation. One out of four firms on average (24 firms) identified the creation of local
employment opportunities as a major issues, half of this group (12) further specified that
to include also indirect employment at suppliers. Decent wages, however, are only
defined by four corporations.
Another way of concretizing an ambition is to link to international initiatives and
codes. For instance 43 of the 100 largest firms subscribed to the UN’s Global Compact in
the 2000-2006 period (36 of which are European corporations). But the Global Compact
only provides general and indirect reference to poverty, whilst it is very weak on
implementation. 17 corporations have expressed general support for the Millennium
Development Goals (MDGs). One quarter of the European firms, and less than 7% of the
American and Asian firms, support the MDGs. A number of in particular European firms
have been very active in further operationalising the MDGs for their business context.
Firms like Royal Dutch Shell (#3) and ABN Amro (#82) have explicitly linked their
sustainable reporting to each of the eight MDGs. As regards poverty related international
codes and labelling initiatives, the most popular initiative up to now has been the ‘Fair
Trade’ label, which has been endorsed for a number of products in their product range by
at least four international retailers. The Ethical Trading Initiative is supported by three
corporations, of which two are American computer and office equipment producers. On
average, however, most large companies still tend to favour own labels and own poverty
related codes, whilst not endorsing already existing codes or standards – such as the ILO
standards.
Finally, two entrepreneurial approaches towards poverty alleviation – microcredits and the Bottom of the Pyramid (BOP) – were distinguished for which
corporations can adopt a narrow and a broad strategy. As regards micro-credits, many
firms have embraced the idea. 23 firms from a wide variety of industries consider microcredits an interesting option as complement to their main business strategy. For instance
ExxonMobil has a number of partnership projects with USAID on microfinance in areas
related to its oil projects (Kazakhstan and Sakhalin). The corporation presents its
microfinance activities as ‘one of many ways ExxonMobil fosters education and
increased opportunities for women [….] as part of the company’s community investment
initiative” (2005 Corporate Citizenship Report). An additional 9 of the 17 banks of the
sample present micro-credits as an interesting part for their general business strategy. The
Dexia Group (#55) for instance asserts itself as one of the world leaders of the
21
international financial market of microfinance, with total assets of around U$ 89 in 2005
(Sustainable development report 2005). Other international banks have followed suit,
making micro-credits a mainstream instrument. The actual volume of the efforts,
however, remain rather limited which serves as an illustration of the relative difficulty
with which this market can be developed. Micro-credits, therefore, are still a relatively
marginal activity for most banks.
As regards the BOP strategy, leading firms are still rather ambiguous. Eight of the
100 largest firms have mentioned the BOP as a possibility, but have primarily embraced
it as yet another market change to sell products in a poor region. Only two firms
(Citigroup, #14; Nestle, #53) have been arguing in favour of a more broad BOP strategy
in which they are developing an explicit view on how this strategy actually addresses
poverty alleviation as a result of direct and indirect effects.
4.2 Varieties of capitalism
Table 3 shows some excerpts from the poverty ‘scoresheet’ that was drawn on the basis
of the previous indicators for the 100 largest Global Fortune corporations in 2006. 43 of
these firms could be positioned in one of the four CSR categories, 52 firms combined two
(adjacent) CSR categories, whilst 4 spread their activities over three categories.
Around 2/3 of the corporations have adopted an inactive and/or a reactive strategy
towards poverty. The four corporations that could be classified a ‘proactive’ have still
adopted rather modest strategies in this area, whilst also embracing re-active and active
traits. No corporation can be classified as wholly pro-active, whereas 40% of the
corporations can indeed be classified as completely ‘inactive’
Table 3 A Poverty Score Sheet - exemplary strategies (2006)
Fortune 500
position
Approach to poverty
Company
Country Sector
1
Exxon Mobil
USA
2
Wal-Mart Stores
USA
General Merchandisers
3
Royal Dutch Shell
NLD
Petroleum Refining
9
Ford Motor
USA
Motor Vehicles and Parts
14
Citigroup
USA
Banks: Commercial and Savings
Petroleum Refining
17
Volkswagen
DEU
Motor Vehicles and Parts
23
Sinopec
CHN
Petroleum Refining
24
Nippon T&T
JAP
Telecommunications
25
Carrefour
FRA
Food and Drug Stores
32
State Grid
CHN
Utilities
46
Samsung Electronics
KOR
Electronics, Electrical Equipment
47
Matsushita Electric Ind.
JAP
Electronics, Electrical Equipment
53
Nestlé
CHE
Food Consumer products
59
Tesco
GBR
Food and Drug Stores
68
Électricité De France
FRA
Electric and Gas Utilities
22
Inactive
Reactive Active
Pro-active
69
Nippon Life Insurance
JAP
Insurance: Life, Health (mutual)
81
Procter & Gamble
USA
Soaps, Cosmetics
Table 4 summarizes the main scores for each variety of capitalism. Typical (pro)active
strategies are primarily embraced by European corporations, whereas the typically inactive strategy is embraced by Asian corporations. American corporations are somewhere
in between, however, with a strong inclination towards the adoption of in-active and reactive strategies. This involves a ‘buffering attitude’ towards critical NGOs that address
the issue of poverty. A good example is provided by Wal-Mart (#2) which in response to
the allegations contained in the Wal-Mart effect first created a public relations ‘war
room’ in 2005 and, next, sponsored a ‘working Wal-Mart families’ site which stresses the
importance of the jobs provided by Wal-Mart for the local community. Wal-Mart stresses
in its other communication in particular the fact that it offers affordable products to
customers – with the suggestion, although not specified, that this might substitute for the
weak buying power of its employees. “If we can go without something to save money,
we do. It’s the cornerstone of our culture to pass on our saving. Every penny we save is a
penny in our customer’s pocket’ (corporate website: www.walmartstores, consulted
March 2007). Most of the action of Wal-Mart can be interpreted as re-active, with no
efforts to work on the issue of poverty in collaboration with critical societal groups.
Table 4 Poverty approaches of Fortune 100 corporations, 2006
[% of row category; overlap possible2]
Inactive Re-active
Active
Total (N=100)
Europe (N=52)
USA (N=30)
East Asia (N=15)
Developing (N=3)
Petroleum Refining (N=14)
Banks (N= 17)
Insurance (N=13)
Electronics, computers, telecom
(N=15)
Motor vehicles and parts (N=13)
Retailers,
general
merchandise,
wholesalers (N=12)
63%
48%
77%
93%
33%
50%
59%
62%
74%
55%
67%
47%
27%
66%
71%
47%
39%
53%
33%
52%
13%
7%
33%
36%
47%
31%
27%
Proactive
4%
8%
0%
0%
0%
14%
6%
0%
0%
69%
75%
46%
42%
23%
17%
0%
0%
As regards specific industries, motor vehicles, electronics and retailer are on average the
2
Overlap possible where companies score on multiple indicators. For instance a company can combine a
‘re-active’ and an ‘active’ score, which basically shows that the company is in a state of transition it still
combines characteristics from two approaches and attitudes.
23
least active in the area of poverty alleviation. In these sectors, the internal sector
dynamics has put a ‘ceiling’ on individual activities towards poverty alleviation. Active
and pro-active attitudes towards the issue of poverty involve ‘bridging’3 strategies. These
bridging strategies are easier adopted in Europe, and in particular by the banking and
petroleum refining industry. Regulation in Europe as well as with these specific
industries has created a ‘floor’ on which more active poverty alleviation strategies have
been required (See Kolk et al, 2006).
Table 5, finally, gives exemplary evidence of the partnership approaches adopted
by a number of companies. More European firms have embraced partnerships and in a
much more (pro)active manner than leading American firms. This is relatively
independent from the actual number of partnerships. American firms embrace
partnerships more often and more (re)active than leading Asian firms. This pattern
corroborates with the general CSR strategies of these three varieties of capitalism. This
conclusion is also further supported by other studies. For instance Muller and Whiteman
(2008) analyzed the ‘geography of corporate philanthropic disaster responses’ amongst
the Fortune Global 500 firms. They observe a process of ‘regionalisation’ in disaster
relief efforts. The response of firms to a selected number of natural disasters proofs to
systematically vary across regions and thus across varieties of capitalism. Regional
differences in corporate approaches towards disaster relief exist. Asian firms show
relatively low cash value of donations. American and European firms were more
generous, but in the case of American donations they were more linked to the
advancements of a private sector in order to increase the disaster preparedness of the
population and the efficiency of the actual relief effort (viz. the US Business
Roundtable’s Partnership for Disaster Relief). European firms seem to have been more
inspired by normative considerations. These observations, however, need additional
research (ibid)
Table 5 Exemplary partnership approaches
no. Company
1 Exxon Mobil
Royal Dutch
3 Shell
4 BP
6 Chevron
13 ING Group
main focus of
partnerships
partnership with…
USAID, UNICEF, Kazakhstan Loan Fund,
microfinance, health
American Red Cross, U.N. Foundation, U.S.
(malaria, measles),
Centers for Disease Control, World Health
disaster relief
Organization, Pakta Foundation
Niger Delta Development Commission (NDDC),
USAID, International Institute for Tropical
community development Agriculture, GLOBACOM
Save the Children, European Bank for
microfinance
Reconstruction and Development
educational/ training
USAID, Discovery Channel
microfinance and
United Nations Capital Development Fund
financial sector
(UNCDF), Oikocredit, Netherlands Financial
development, education Sector Development Exchange (NFX), UNICEF
3
The term refers to the ability of firms to overcome differences with stakeholders by discussion, dialogue
or other means of communication.
24
Working Women’s Forum (Chennai),
Association for Enterprise Opportunity (AEO),
microfinance, disaster
World Food Program (WFP), American Red
Cross
14 Citigroup
relief
environmentaluniversities of Newcastle-upon-Tyne and East
HSBC
innovation oriented
Anglia, Earthwatch
26 Holdings
FORCE (local NGO in India), UN Environment
programme finance Initiative, BTCV,
Earthwatch, WWF, Business in the Community,
microfinance, water
International Business leaders Forum (IBLF)
shortage
28 Aviva
ADIE (non-profit association specialised in
34 BNP Paribas microfinance
microfinance)
41 Nissan Motor disaster relief
Habitat for Humanity
Save the Children U.S. and Fudeco (Save the
Verizon
50 Comm.
literacy
Children- Dominican Republic)
WARMTH (War against Malnutrition, TB &
sustainable agriculture,
HIV), Healthy Thai Children (a joint privatehunger, several
public effort with the Dept of Health and Ministry
partnerships in all
of Public Health), Turkish Education Volunteers
53 Nestlé
MDGs…
Foundation + many more
57 Credit Suisse disaster relief
Habitat for Humanity
labour standards, disaster Wine and Agricultural Ethical Trade Association
59 Tesco
relief
(WIETA), British Red Cross
Zurich
Financial
63 Serv.
disaster relief
International Committee of the Red Cross
Care France, Fondation Nicolas Hulot, UNCPIE
(Union nationale des centres permanents
Électricité De
68 France
community development d’initiatives pour l’environnement)
Ministry for Education (Senegal, Jordan),
France
UNICEF, USAID
71 Télécom
education
European Generic Association (EGA), the
Business Humanitarian Forum (BHF) and the
Deutsche Investitions- und
Entwicklungsgesellschaft (DEG—the German
Investment and Development Corporation),
disaster relief, health
UNDP, OCHA, Red Cross and Red Crescent
(medicine
Societies
75 Deutsche Post supply/distribution)
USAID, Johns Hopkins Bloomberg School of
Public Health, CARE, and Population Services
International (PSI), International Council of
Nurses (ICN), UNICEF, Samaritan’s Purse,
World Vision, International Rescue Committee,
Procter &
CARE, Red Cross, and AmeriCares
drinking water
81 Gamble
ABN AMRO microfinance , financial Oxfam Novib, ‘Netherlands Financial Sector
82 Holding
sector development
Development Exchange (‘NFX’), World Bank
96 Suez
Essor
25
5. Conclusion: preconditions for a sustainable corporate story?
Is the present state-of-affairs on the involvement of (big) business in poverty
reduction ground for optimism or pessimism? Although most entrepreneurs and
corporations do not yet see the alleviation of global poverty as a strategic priority (Singer,
2006), this contribution has illustrated the extent to which the issue itself has climbed up
the corporate strategy ladder. The bottleneck of making it a real strategic priority in
which firms adopt active or pro-active strategies seems less the complexity of the issue,
but more the conceptual and strategic ‘poverty’ that surrounds the issue. Rather narrow
approaches for entrepreneurial solutions to poverty still prevail and only a few pro-active
approaches have been tried, which makes it yet impossible to come up with convincing
‘sustainable corporate stories’ in which at the operational as well as the strategic level
leading firms have developed and implemented poverty alleviation strategies. This paper
has also shown that the chances are biggest that a sustainable corporate story will
materialize with some of the leading European firms. They have developed the most
interesting examples as regards partnerships, broader approaches to the bottom of the
pyramid, and novel business models. But even for these firms, it proofs not easy to
change their strategic orientation.
MNEs are still strongly influenced by their ‘countries of origin’ (varieties of
capitalism) as regards their CSR strategies. This is partly due to the regulatory framework
in these countries, but also due to sectoral dynamics. Different sectors face different
problems and are at different stages when it comes to alleviating poverty. So a way
forward in this regard might therefore to not approach single, individual (often high
profile) MNEs, as some NGOs and international organizations tend to do, but to create an
enabling environment that facilitates dialogue and subsequent action at the sector level.
Complementary, GRI and other international organizations might develop reporting
guidelines and develop specific poverty alleviation indicators per sector.
A final and perhaps most worrying future dimension of the business interest in poverty
originates in the very dynamics of issue management. Issues are always prone to strategic
re-assessments of the CEOs. In the research under 200 European CEOs that was referred
to earlier (Kaptein et al, 2007), we also asked to indicated the expected increase in
urgency of the ten selected CSR issues. The following ranking (Table 6) was the result of
this exercise. CEO could indicate the issue importance on a scale from 1 (not at all) to 5
(very much).
Table 6 Future urgency of issues
Expected increase in issue urgency
1. Global warming
2. Transparency of business practice
3. Ecological diversity
26
Mean
4.4
3.8
3.7
4. Fair trade and fair procurement
5. Corruption prevention
6. Labour rights
7. Health and safety
8. Education
9. Income equality and fair wages
10. Poverty
3.5
3.5
3.4
3.4
3.2
3.1
3.0
Source: Kaptein et al, 2007
Considering that European CEOs and corporations have been leading in the world on
trying to address the issue of poverty, we can expect that its urgency is not likely to
increase in the nearby future. The expected attention of corporate CEOs for poverty is
above average (2.5), but remains stable. This represents a breach of the trend of
increasing attention for the issue over the past decade. More importantly a number of
poverty-related issues like income equality and fair wages, and education are declining in
importance as well. This is a remarkable development and is caused by at least two
developments that are inherent to ‘issue management’. First, the issue of ‘global
warming’ has been getting most of the attention in as well the public debate (the Gore
effect) as with stakeholders and shareholders of large corporations. This ‘crowds out’
other issues like poverty and poverty related issues. Secondly, the supporters of the
Millennium Development Goals in their 2007 evaluation reports have stressed that in
particular MDG 1 (halving poverty) might be reached. In issue management, the relative
urgency defines the willingness of managers to address the issue. As soon as policy
makers started to emphasize that MDG1 might be reached, the issue loses importance. So
the issue of poverty might not only fall victim to a substituting issue (global warming),
but also to claimed success in addressing it. This poses a problem, since the issue will
certainly not be solved. On the contrary, the 1$ a day benchmark has been criticized as
relatively low (or not very ambitious), whereas the goal is relatively easily reached
through the gigantic economic growth of in particular China and India. It can be
anticipated that relative poverty will not decrease and many regions and countries – in
particular in Africa - will not reach MDG1.
It can be concluded that the business involvement in addressing the issue of poverty is
far from settled, first by a lack of meaningful benchmarks, approaches and measurement
tools, not by a lack of ‘best-practice’ cases. Secondly, however, it was also suggested that
too low ambitions – and too optimistic expectations - might also dampen the efforts of
the business sector in explicitly addressing poverty. Maybe the next sustainable
corporate story should be formulated by governments rather than by the firms
themselves. It will include a mixture of (self)regulation, partnerships and transparency
increasing measures.
27
Bibliography
Andriof, J. and M. McIntosh (eds) (2001) Perspectives on Corporate Citizenship, Sheffield:
Greenleaf Publishing
Austin, J.E. 2000b. Principles for partnership. Leader to Leader, 18(Fall), 44-50.
Barro, R.(1999) "Inequality, Growth and Investment", NBER Working Paper 7038.
Blowfield, M. (2005) ’Corporate Social Responsibility: reinventing the meaning of
development?’, International Affairs; May, Vol. 81 Issue 3, p515-524
Chataway, J., & Smith, J. 2006. The International AIDS Vaccine Initiative (IAVI): Is it getting
new science and technology to the world's neglected majority?. World Development,
34(1): 16-30.
Clay, J. (2005) Exploring the Link Between International Business and Poverty Reduction: A case
Study of Unilever in Indonesia, Oxfam GB, Novib Oxfam Netherlands and Unilever
De Soto, H. (2000) The Mystery of Capital, Basic Books
Donaldson, T. and T. Dunfee (1999) Ties that Bind: a social contract approach to business ethics,
Boston: Harvard Business School Press
Dunning, J.H. and Fortanier, F. ‘Multinational Enterprises and the New Development Paradigm:
consequences for host country development’, Multinational Business Review,
forthcoming.
Dutch Sustainability Research (2007) The MDG Scan, The Hague; See
www.businessindevelopment.nl
Easterly, W. (2002) The Elusive Quest for Growth; economists’ adventures and misadventures in
the tropics. Cambridge, MA: The MIT press Documentation.
Food and Agricultural Organisation (2002) The State of Food Insecurity in the World , Rome:
FAO
Fombrun, Ch. and C. Van Riel (2004) Fame and Fortune. How successful companies build
winning reputations, new York: Financial Times/Prentice Hall
Fortanier, F. (2008) Multinational Enterprises, Institutions and Sustainable Development, PhD
Dissertation, University of Amsterdam.
Fortanier, F. and A. Kolk (2007) ‘On the Economic Dimensions of CSR: Exploring Fortune
Global 250 Reports’, Business and Society, forthcoming, 26pp.
Global Reporting Initiative (GRI) (2004), Communicating Business Contributions to the
Millennium Development Goals Amsterdam: GRI.
Habermas, J. (1990) Moral Consciousness and Communicative Action, Cambridge, MA: MIT
Press
Hart, S. and S. Sharma (2004) ‘Engaging fringe stakeholders for competitive imagination’,
Academy of Management Executive, 2004, Vol. 18, No. 1: 7-18
Institute of Development Studies (2006) The ETI Code of Labour Practice: Do workers really
benefit?, Sussex
Jackson, g. and R. Deeg (2008) ‘Comparing capitalisms: understanding institutional diversity and
its implications for international business’, Journal of International Business Studies, 39:
540-561
Jain, S. And S. Vachani (eds) (2006) Multinational Corporations and Global Poverty Reduction,
Cheltenham: Edward Elgar
Kaptein, M. , L. Koning, R. Van Tulder, L. Van Vliet (2007) 2007 Report on European CSR
28
Survey, RSM Erasmus University, July
Kolk, A and R. van Tulder (2005) ‘Setting new global rules?’ Transnational Corporations,
14:3,1-17
Kolk, A, Van Tulder, R and B.Westdijk (2006) Poverty alleviation as business strategy?
Evaluating commitments of frontrunner Multinational Corporations,
World
Development, Vol.34, No.5, pp. 789-801
KPMG (2005) International Survey of Corporate Responsibility Reporting 2005, Amsterdam
Lodge, G and G. Wilson (2006) A Corporate Solution to Global Poverty:
How Multinationals Can Help the Poor and Invigorate Their Own Legitimacy, Princeton
University Press
Maignan, I. and D. Ralston (2002) ‘corporate social responsibility in Europe and the US’, Journal
of International Business Studies, 33:3, 497-514
Michaelson, C. (2006) Compliance and the illusion of ethical progress. Journal of Business
Ethics, 66: 241-251.
Oxfam (2004) The Rural Poverty Trap, Why agricultural trade rules need to change and what
UNCTAD XI could do about it; Oxfam Briefing Paper no. 59.
Post, J. (1979) ‘the corporation in the public policy process – a view towards the 1980s’, Sloan
Management Review, 21, 45-52
Prahalad (2005) the Fortune at the Bottom of the Pyramid. Eradicating Poverty through Profits,
Wharton School Publishing
Prahalad, C.K. and M.S. Krishan (2008) the New Age of Innovation: driving co-created value
through global networks, New York: McGraw Hill
Preston, L. and J. Post (1975) Private Management and Public Policy, Englewood Cliffs, NJ:
Prentice Hall
Sachs, J. (2005) the End of Poverty. How we can make it happen in our lifetime, Penguin
Samii, R., Van Wassenhove, L.N., & Bhattacharya, S. 2002. An innovative public-private
partnership: new approach to development. World Development, 30(6): 991-1008.
Selsky, J.W., & Parker, B. 2005. Cross-sector partnerships to address social issues: challenges to
theory and practice. Journal of Management, 31(6): 849-873.
Unicef (2005) The State of the World’s Children, Unicef
US Department of Labour, US Bureau of Labour Statistics (2005) A profile of the Working Poor,
2003, Washington, Report 983
UN (2004) Human Development Report, New York: United Nations
UN Millennium Project (2005), Investing In Development: A practical plan to achieve the
Millennium Development Goals, UNDP: New York.
Van Tulder, R., van
Mil, E, Kaptein, M and Schilpzand (2004)
De strategische
stakeholderdialoog, Den Haag/Rotterdam: RSM/S&P
Van Tulder, R. with Alex van der Zwart (2006) International Business-Society Management:
linking corporate responsibility and globalization, London: Routledge
Van Tulder, R. (2007) Skill Sheets: an integrated approach to research, study and management,
Amsterdam: Pearson Education
Van Tulder, R. & Kolk, A. (2007) ‘Poverty alleviation as a business issue’, in: Wankel, C. (ed)
21st Century Management. A reference Handbook, London: Sage, pp. 95-105
Van Tulder, R., J. van Wijk, A. Kolk (2008) ‘From chain liability to chain responsibility’, Journal of
Business Ethics, (forthcoming)
Wartick, S.L. and J.F. Mahon (1994). Toward a substantive definition of the corporate issue
29
construct. Business and Society, 33(3): 293-311
Wilson, G and P. Wilson (2006) Make Poverty History: Increase profits and reduce risks by
engaging with the poor, Aizlewood’s Mill: Greenleaf Publishing
World Bank (2004) World Development Indicators, Washington: The World Bank Group
30
ANNEX A: Top 100 Corporation’s general statements on poverty
“We believe that an effective, long term climate policy should first and foremost promote: global
participation, transfer of efficient technology, accelerated research and development of innovative,
affordable low greenhouse gas technologies, acceptance of the priorities of developing countries, which
include economic development and poverty alleviation and increased research in climate science”.
ExxonMobil Corporate Citizenship Report 2005
--“The Shell Foundation aims to support sustainable solutions to social problems arising from the links
between energy, poverty and environment, and from the impact of globalization on vulnerable
communities” (…) “We believe that by far our biggest contribution to the Millennium Development
Goals comes from delivering the modern energy needed to lift people out of poverty. In particular,
electricity plays a key role in achieving the MDGs - whether for lighting, telecommunications or
powering water pumps for the almost 1.6 billion people living without electricity.
Royal Dutch Shell, Enterprise solutions to Poverty Report, 2005 (www.shell.com/mdgs)
--“Our primary means of making a positive impact on poverty is through aligning our own operations
with local people’s needs. (…) We can sell affordable products that enable people to improve their
standard of living, including motor and heating fuels. (….) Energy is a major factor in lifting people out
of poverty. (…)”
British Petroleum, Sustainability Report 2005
--“General Motors recognizes that economic growth and development can affect people and the
environment, in both positive and negative fashion. However, economic growth, when managed
effectively, can help improve living standards, reduce poverty, and develop environmental and health &
safety programs. Such improvements demand close cooperation among governmental, business, and
nongovernmental organizations.”
General Motors, Corporate Responsibility Report, 2005
--“Good relations across every level are vital to peace and stability in the transatlantic region and
throughout the world, to win the fight against poverty, hunger, and terrorism, and to assure the
universal benefits that can accompany successful globalization. (…) Helping the poor and elderly,
caring for orphaned children and victims of natural disasters, maintaining natural sanctuaries:
DaimlerChrysler employees are committed volunteers, and they can rely on company support. With
fewer problems outside the plant, it’s easier to concentrate on work inside it.”
DaimlerChrysler, 360 degrees sustainability facts
--“… broad sustainability challenges set the context for all of the lifecycle stages. These include
population growth, urbanization, poverty, education, gender equality, child mortality, maternal health,
infectious diseases, biodiversity and loss of ecosystem services. (…) Climate change is linked to social
concerns including population growth, access to mobility and poverty alleviation.”
Ford, Sustainability Report 2005
31
--‘Our community programs are also designed (…) to help eradicate poverty and achieve the Millennium
Development Goals. (…) Total is a partner in the Growing Sustainable Business for Poverty Reduction
(GSB) initiative that stems from the UN Global Compact Policy Dialogue 2002: Business and
sustainable development. It is designed to reduce poverty by developing countries that respect
international standards and the ten principles of the Global Compact.”
Total, Corporate Social Responsibility Report, 2005
--‘we not only participate in project and partnerships on a commercial basis, but also where the
objectives are socially oriented such as poverty reduction and improving education.”
ING Group, Corporate Responsibility Report, 2005
--“among the many issues being shaped by (today’s) changes is the issue of global poverty. Poverty
should be a compelling moral issue, but it is also a powerfully important economic issue for all of us.
Huge societal costs could be saved and productivity could be greatly enhanced in both the U.S. and in
the world if those who live in poverty could be effectively equipped to enter the mainstream economy.
(…) The public and private sectors each have a critical role to play in combating poverty. The private
sector’s contribution lies in building successful businesses that employ and train people, developing
capital markets, paying taxes and promoting innovation. Citigroup takes its role in the effort to combat
and overcome global poverty with great seriousness, and will increase its focus on this mission so vital
to all people in the years ahead.”
Citigroup, Citizen Report, 2005
--‘Supporting microfinance is one of the ways in which financial institutions can support the UN
Millennium Development Goal of eradicating extreme poverty.”
HSBC, Corporate Social Responsibility Report, 2005
--“While we might not describe our mission statement exactly the same as it was described by an older
gentleman in a village in India whose grandchildren were benefiting from IBM’s KidSmart Early
Learning Program – “a great company that does good work for poor people” – we can be proud to be
that for someone. And proud to be a great company that does good work for much of the rest of the
world, as well.”
IBM, Innovations in Corporate Responsibility 2004-2005
--‘SGCC sincerely performs social responsibilities and actively participates in many social activities such
as emergency rescue, providing help to those in poverty and those in difficulties. (…) SGCC actively
participates in poverty alleviation projects initiated by Central Government Institutes and central
governed State Owned Enterprises.”
State Grid, CSR website, visited January 2007
--‘PDVSA is 100% committed to the eradication of both rural and urban poverty.”
PDVSA, website, visited January 2007
---
32
‘Through various ways such as donations and investments, CNPC actively supported the poverty
relieving, education, as well as cultural activities of local communities, making great contributions to
the improvement of living standards, medical and education conditions of local”
China National Petroleum, Annual report 2004
--“At present, the world has a large number of people living in poverty and needs a level of economic
growth sufficient to raise their standard of living. At the same time we must not be allowed to damage
the environment (…). We are thus faced with the problem of combining economic growth and
environmental conservation. (…) Enterprises around the world are now under pressure to put in place
sustainable business models that will allow the two to be combined.”
Matsushita Electric Industrial, CSR Report, 2006
--“The 2005 ‘make poverty history’ campaign identified increased trade as one of the three key means of
eliminating poverty – an aim we support.”
Tesco, Corporate Responsibility Review, 2006
--“Our point is that a company of the size and power of EDF must deal with the issues of climate, energy
and poverty with more than goodwill, small experiments and marginal resources. We therefore
recommend ambitious aims and specific targets. (….) Energy, especially electricity is a vital commodity.
To be deprived of electricity leads to exclusion: social exclusion in the case of low-income customers,
and economic exclusion for developing countries.”
Electricite de France, Annual Report Sustainable Development, 2005
--“Often globalization is believed to be widening the gap between rich and poor. We see it as a duty and
challenge to promote trade and help raise incomes in the poorer countries in which we operate. At the
same time, we recognize that we must also help counteract the tendency toward financial inequality in
these areas.”
Deutsche Post, Sustainability Report, 2006
--‘While we remain humbled by the scale of poverty and disease and lost human opportunity that the
world faces, we feel we are making progress toward our vision of sustainable development. (…) A key
challenge when linking business opportunities with corporate responsibility is whether we can create
new business models appropriate to low-income developing markets.”
Proctor & Gamble, Sustainability Report, 2005
--“Climate change, globalization, security issues, global inequality, poverty, environment issues,
international trade and money flows all have increasingly profound impact on our world, and hence on
our lives and our corporations. (….) In line with our tag line of ‘making more possible’, the community
investment focus for the bank is on ‘sustainable livelihoods’: providing people with the means and
opportunity to sustain their lives and build a future. The bank aims to contribute to the MDGs,
especially to the first goal of eradicating poverty.”
ABN Amro, Sustainability Report, 2005
--“In the wider picture of our global activities, what motivates us is the ongoing quest to improve the
33
quality of life in the communities in which we operate. Our initiatives are in areas such as job creation,
income generation, combating poverty and hunger, guaranteeing the rights of children and adolescents,
the promotion of citizenship and equality in terms of race and gender, as well as preservation of the
environment.”
Petrobras, Social and Environmental Report, 2005
--‘Many people, often the poorest, fail to benefit from financial services because they lack either the
knowledge or the opportunity to gain access to them. (….) We have been at the forefront of developing
financial services especially tailored for excluded communities.”
Lloyds TSB Group, Corporate Responsibility Review, 2006
34
Annex B: Firm Sample – Fortune’s 100 largest Global Companies, 2006
Fortune 500
position
Company
Country Sector
1
Exxon Mobil
USA
Petroleum Refining
2
Wal-Mart Stores
USA
General Merchandisers
3
Royal Dutch Shell
NLD
Petroleum Refining
4
BP
GBR
Petroleum Refining
5
General Motors
USA
Motor Vehicles and Parts
6
Chevron
USA
Petroleum Refining
7
DaimlerChrysler
DEU
Motor Vehicles and Parts
8
Toyota Motor
JAP
Motor Vehicles and Parts
9
Ford Motor
USA
Motor Vehicles and Parts
10
ConocoPhillips
USA
Petroleum Refining
11
General Electric
USA
Diversified Financials
12
Total
FRA
Petroleum Refining
13
ING Group
NLD
Insurance: Life, Health (stock)
14
Citigroup
USA
Banks: Commercial and Savings
15
AXA
FRA
Insurance: Life, Health (stock)
16
Allianz
DEU
Insurance: P & C (stock)
17
Volkswagen
DEU
Motor Vehicles and Parts
18
Fortis
BEL
Banks: Commercial and Savings
19
Crédit Agricole
FRA
Banks: Commercial and Savings
20
American Intl. Group
USA
Insurance: P & C (stock)
21
Assicurazioni Generali
ITA
Insurance: Life, Health (stock)
22
Siemens
DEU
Electronics, Electrical Equipment
23
Sinopec
CHN
Petroleum Refining
24
Nippon T&T
JAP
Telecommunications
25
Carrefour
FRA
Food and Drug Stores
26
HSBC Holdings
GBR
Banks: Commercial and Savings
27
ENI
ITA
Petroleum Refining
28
Aviva
GBR
Insurance: Life, Health (stock)
29
IBM
USA
Computers, Office Equipment
30
McKesson
USA
Wholesalers (Health Care)
31
Honda Motor
JAP
Motor Vehicles and Parts
32
State Grid
CHN
Utilities
33
Hewlett-Packard
USA
Computers, Office Equipment
34
BNP Paribas
FRA
Banks: Commercial and Savings
35
PDVSA
VEN
Petroleum Refining
36
UBS
CHE
Banks: Commercial and Savings
37
Bank of America Corp.
USA
Banks: Commercial and Savings
38
Hitachi
JAP
Electronics, Electrical Equipment
39
China Nat. Petroleum
CHN
Petroleum Refining
35
40
Pemex
MEX
Mining, Crude Oil Production
41
Nissan Motor
JAP
Motor Vehicles and Parts
42
Berkshire Hathaway
USA
Insurance: P & C (stock)
43
Home Depot
USA
Specialist Retailers
44
Valero Energy
USA
Petroleum Refining
45
J.P. Morgan Chase
USA
Banks: Commercial and Savings
46
Samsung Electronics
KOR
Electronics, Electrical Equipment
47
Matsushita Electric Ind.
JAP
Electronics, Electrical Equipment
48
Deutsche Bank
DEU
Banks: Commercial and Savings
49
HBOS
GBR
Banks: Commercial and Savings
50
Verizon Comm.
USA
Telecommunications
51
Cardinal Health
IRL
Wholesalers (Health Care)
52
Prudential
GBR
Insurance: Life, Health (stock)
53
Nestlé
CHE
Food Consumer products
54
Deutsche Telekom
DEU
Telecommunications
55
Dexia Group
BEL
Banks: Commercial and Savings
56
Metro
DEU
Food and Drug Stores
57
Credit Suisse
CHE
Banks: Commercial and Savings
58
Royal Bank of Scotland
GBR
Banks: Commercial and Savings
59
Tesco
GBR
Food and Drug Stores
60
Peugeot
FRA
Motor Vehicles and Parts
61
U.S. Postal Service
USA
Mail, Package and Freight Delivery
62
Altria Group
USA
Food and tobacco
63
Zurich Financial Serv.
CHE
Insurance: P & C (stock)
64
E.ON
DEU
Energy
65
Sony
JAP
Electronics, Electrical Equipment
66
Vodafone
GBR
Telecommunications
67
Société Générale
FRA
Banks: Commercial and Savings
68
Électricité De France
FRA
Electric and Gas Utilities
69
Nippon Life Insurance
JAP
Insurance: Life, Health (mutual)
70
Statoil
NOR
Mining, Crude Oil Production
71
France Télécom
FRA
Telecommunications
72
LG
KOR
Electronics, Electrical Equipment
73
Kroger
USA
Food and Drug Stores
74
Munich Re Group
DEU
Insurance: P & C (stock)
75
Deutsche Post
DEU
Mail, Package and Freight Delivery
76
State Farm Insurance
USA
Insurance: P & C (mutual)
77
Marathon Oil
USA
Petroleum Refining
78
BMW
DEU
Motor Vehicles and Parts
79
Fiat
ITA
Motor Vehicles and Parts
80
Hyundai Motor
KOR
Motor Vehicles and Parts
81
Procter & Gamble
USA
Soaps, Cosmetics
82
ABN AMRO Holding
NLD
Banks: Commercial and Savings
36
83
Royal Ahold
NLD
Food and Drug Stores
84
Repsol YPF
ESP
Petroleum Refining
85
Legal & General Group
GBR
Insurance: Life, Health (stock)
86
Petrobrás
BRA
Petroleum Refining
87
Toshiba
JAP
Electronics, Electrical Equipment
88
Dell
USA
Computers, Office Equipment
89
Lloyds TSB Group
GBR
Banks: Commercial and Savings
90
ThyssenKrupp
DEU
Industrial & Farm Equipment
91
Boeing
USA
Aerospace and defense
92
AmerisourceBergen
USA
Wholesalers (Health Care)
93
Santander
ESP
Banks: Commercial and Savings
94
BASF
DEU
Chemicals
95
Costco Wholesale
USA
Specialty Retailers
96
Suez
FRA
Energy
97
Target
USA
General Merchandisers
98
Morgan Stanley
USA
Securities
99
Robert Bosch
DEU
Motor Vehicles and Parts
100
Renault
FRA
Motor Vehicles and Parts
37